China’s GDP Report Reveals Post-Covid Challenges
China’s economic data for the end of last year is expected to show a significant decrease in growth due to the abrupt end of the Covid Zero policy and a surge in infections in December. However, there is anticipation for a strong rebound in 2023. Official data will be released on Tuesday, which is expected to show a slump in activity similar to the levels seen during the lockdown in Shanghai in the spring of 2020.
The economic data for the final quarter of 2022 is expected to show a significant decrease in growth, with a median estimate of 1.6% according to a Bloomberg survey of economists. This is less than half the pace recorded in the third quarter of 2022. For the full year of 2022, GDP is projected to have grown just 2.7%, significantly below the government’s ambitious goal of “around 5.5%” and slightly above the 2.2% increase posted in 2020 when the pandemic first hit.
China’s Q4 2022 GDP slows, Covid measures impact
Covid control measures in 2022 have had a significant impact on China’s economy, with full-scale lockdowns in places like Shanghai and restrictions on travel and movement of goods causing disruptions to production and consumption. The sudden ending of the Covid Zero policy at the end of 2022 resulted in a further decline in activity as workers fell ill and consumers avoided going out for fear of getting sick. This has resulted in a marked weakening in growth at the end of last year, as reported by official data.
What to Expect from China’s Important Economic Data
According to a survey of analysts conducted by Bloomberg, China’s GDP is predicted to have increased by 1.6% in the fourth quarter of 2022 compared to the same period the year before, a considerable decline from the 3.9% growth recorded in the third quarter. The survey also reveals that, in contrast to November’s 2.2% gain, industrial production increased by just 0.2% in December of last year. After declining by 5.9% in November, retail sales most certainly decreased by 9% in December. Additionally, it is anticipated that the jobless rate rose from 5.7% in November to 5.8% in December. Additionally, a 5% slowdown in fixed asset investment growth is anticipated in 2022.
There are signs, meanwhile, that outbreaks in important cities like Beijing and Guangzhou have peaked and that activity has begun to pick up again in recent weeks. Although some large banks, including Morgan Stanley, Bank of America, and Citigroup Inc., anticipate growth to be closer to 5.5% or higher, the median forecast in a Bloomberg survey of experts is for GDP growth to rise to 4.8% in 2023. In order to prevent overstimulating an economy that is moving toward normalized activity, the People’s Bank of China has adopted a cautious attitude, injecting less money into the banking system through policy loans and leaving the rate steady on Monday.
Factories are slow
Economists expect that industrial production in China increased at a slower pace in recent months, due in part to lockdowns in Shanghai and other areas.
The housing market is still struggling
The property market in China remains weak, with home sales still falling in December and housing prices have declined for the 16th consecutive month. Despite efforts by regulators to support the property market, the effects have yet to be seen. Fixed-asset investment, however, has been supported by stronger spending on infrastructure and healthy manufacturing growth.